01962cam a22002297 4500001000600000003000500006005001700011008004100028100002500069245012900094260006600223490004100289500001500330520102700345530006101372538007201433538003601505710004201541830007601583856003701659856003601696w0684NBER20161209123144.0161209s1981 mau||||fs|||| 000 0 eng d1 aMcCallum, Bennett T.10aOn Non-Uniqueness in Rational Expectations Modelsh[electronic resource]:bAn Attempt at Perspective /cBennett T. McCallum. aCambridge, Mass.bNational Bureau of Economic Researchc1981.1 aNBER working paper seriesvno. w0684 aJune 1981.3 aMany macroeconomic models involving rational expect at ions give rise to an infinity of solution paths, even when the models are linear in all variables. Some writers have suggested that this non-uniqueness constitutes a serious weakness for the rational expectations hypothesis. One purpose of the present paper is to argue that the non-uniqueness in question is not properly attributable to the rationality hypothesis but, instead, is a general feature of dynamic models involving expectations. It is also argued that there typically exists, in a very wide class of linear rational expectations models, a single solution that excludes "bubble" or "bootstrap" effects -- ones that occur only because they are arbitrarily expected to occur. A systematic procedure for obtaining solutions free from such effects is introduced and discussed. In addition, this procedure is used to interpret and reconsider several prominent examples with solution multiplicities, including ones developed by Fischer Black and John B. Taylor. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w0684.4 uhttp://www.nber.org/papers/w068441uhttp://dx.doi.org/10.3386/w0684